RNS Number:7624Q
Silverdell PLC
26 March 2008
SILVERDELL PLC
IFRS RESTATEMENT REPORT
INTRODUCTION
Silverdell plc ("Silverdell Plc" or "the Group") is required to prepare
consolidated financial statements in accordance with International Financial
Reporting Standards (IFRS) for accounting periods commencing on or after 1
January 2007. Silverdell plc will therefore publish its 2008 Interim Report and
2008 Annual Report and Accounts in accordance with IFRS.
This report has been prepared to:-
A Explain the basis on which Silverdell plc has effected the transition to
IFRS;
B Highlight the significant differences between UK GAAP and IFRS which affect
Silverdell plc;
C Set out the Group's principal accounting policies under IFRS; and
D Show the impact of restatement in accordance with IFRS on the Group's
previously reported results and financial position under UK GAAP.
The financial information is set out in four sections:-
Section 1 Basis of preparation
This describes the IFRS 1 exemptions the Group has elected to
take and the assumptions made in implementing IFRS. This section
provides an overview of the impact of IFRS on the financial
statements and explains the principal differences between UK GAAP
and IFRS affecting the Group's financial statements.
Section 2 Financial information for the year ended 30 September 2007
This comprises a restated consolidated income statement, balance
sheet, cashflow statement and statement of changes in
shareholders' equity. Also included is the restated opening
balance sheet at 1 October 2006.
Section 3 Principal accounting policies
This comprises the principal accounting policies the Group has
adopted and upon which the restated financial statements have
been prepared.
Section 4 Appendices
This section comprises detailed reconciliations showing:-
- The presentational adjustments that arise between previously
reported UK GAAP results when presented in IFRS format; and
- The measurement adjustments that arise through the
implementation of IFRS to the restatement schedules.
SECTION 1
BASIS OF PREPARATION
1.1 Qualifications and IFRS 1 exemptions
Alternative Investment Market (AIM) regulations require that the
Group's financial statements for the year ended 30 September 2008 are
prepared on the basis of IFRS, including interpretations issued by the
Standing Interpretations Committee (SIC) and International Financial
Reporting Interpretations Committee (IFRIC) of the International
Accounting Standards Board. At the date of publication of this
document, not all these standards have been endorsed by the European
Commission and it is possible that changes will be required to the
restated financial statements before they are published as comparative
information in the Group's 2008 Interim Report and in the 2008 Annual
Report and Accounts.
IFRS 1 exemptions
The transition to IFRS is governed by the requirements of IFRS1 "First
Time Adoption of IFRS". The Opening IFRS balance sheet on 1 October
2006 (the date of transition to IFRS) has been prepared using
accounting policies which the directors expect to be applicable as at
30 September 2008.
IFRS 1 permits companies adopting IFRS for the first time to take
certain exemptions from full retrospective application of IFRS
accounting policies. Described below are the applicable instances
where the Group has not opted for these exemptions:
(a) Business combinations: The Group has chosen to restate business
combinations that occurred prior to 1 October 2006 to comply with
IFRS 3 'Business Combinations'. As a result that carrying value
of goodwill recorded under UK GAAP as at 1 October 2006 has been
amended at transition date.
(b) Financial instruments: The Group has applied IAS 32 and IAS 39
from 1 October 2006.
In accordance with IFRS 1 the Group has not revised estimates
required under IFRS that were also required under UK GAAP as at
31 September 2006 and 2007, and, in addition where estimates were
not required under UK GAAP, they have been based on information
known at that time, and not on subsequent events.
1.2 Basis of presentation
The preliminary comparative financial statements included in this
document are in accordance with IAS 1 'Presentation of Financial
Statements'. This is different from the UK GAAP and Companies Act
presentation, and introduces a new primary statement, the statement of
changes in equity. In the balance sheet, debtors and creditors of more
than one year are presented as non current assets and liabilities
respectively.
IAS 1 explains that, due to the effects of an entity's various
activities, transactions and other events differing in frequency,
potential for gain or loss and predictability on the financial
statements, disclosing the components of financial performance assists
in an understanding of the financial performance achieved and in
making projections of future results.
Factors to be considered when deciding on separate disclosure include
materiality and the nature and function of the components of income
and expense, and when items of income and expense are material, IAS 1
requires that their nature and amount be separately disclosed.
Accordingly Silverdell plc considers that items which are both
material and non-recurring should be presented and disclosed as what
the Group will term 'exceptional items'. Examples of items which may
give rise to the classification as exceptional items include gains or
losses on the disposal of businesses, investments and fixed assets,
costs of restructuring and reorganisation of businesses and asset
impairments.
1.3 Overview of impact of IFRS
A summary of the impact of IFRS on the Group's 2007 profit for the
year, earnings per share and net assets is set out below. Explanations
of these changes are set out in paragraph 4.
1.3.1 Income statement
Impact of IFRS
For the year ended 30 September 2007
Para No. �'000
UK GAAP profit for the year 872
IAS 38 - Intangible Asset amortisation (net of taxation) 1.4.1 (1,506)
IFRS 3 - Goodwill Amortisation not charged 1.4.2 1,391
_______
IFRS restated profit for the year 757
_______
Table 1: IFRS Adjusted Profit for the year
1.3.2 Earnings per share
For the year ended 30 September 2007
Basic Diluted
PENCE PENCE
UK GAAP 2.39 2.25
________ ________
IFRS 2.07 1.95
________ ________
Change (0.32) (0.30)
The movements in earnings per share are due to:
Goodwill amortisation not charged 3.81 3.58
Intangible asset amortisation (4.13) (3.88)
Table 2: IFRS Adjusted Earnings per share
1.3.3 Net assets
Reconciliation of net assets
Para No. �'000
Net assets - UK GAAP at 30 September 2007 33,981
IAS 38 - Intangible assets amortisation (net of taxation) 1.4.1 (1,709)
IFRS 3 - Goodwill amortisation not charged 1.4.2 1,582
IFRS 2/ - Share based payments - tax effects 1.4.3 169
IAS 12
IAS 39 - Derivative financial instruments 1.4.4 62
_______
IFRS restated net assets at 30 September 2007 34,085
_______
Table 3: IFRS Adjusted net assets
1.4 Principal differences between UK GAAP and IFRS
The principal differences between UK GAAP and IFRS affecting the Group
are described below in paragraphs 1.4.1 to 1.4.4.
1.4.1 IAS 36 and IAS 38: Intangible assets
IFRS 3 requires recognition of separately identifiable intangible
assets. These intangible assets are amortised over their expected
useful lives. Previously under UK GAAP, these intangibles would
have been classified as goodwill and amortised over their useful
lives (typically between 10 and 20 years).
The Group has applied IAS 38 Intangible Assets to acquisitions,
which has resulted in the recognition of customer relationships
and order backlog intangible assets. These intangible assets
would not have qualified for recognition under UK GAAP. These are
being amortised over 1 to 3 years.
1.4.2 IFRS 3: Business combinations and Goodwill
Under UK GAAP goodwill was amortised on a straight line basis
over its economic useful life of up to 20 years, tested for
impairment and provided for as necessary. Under IFRS 3 "Business
Combinations", goodwill is no longer amortised but is carried and
subject to annual review for impairment. Accordingly the goodwill
amortisation charged of �1,391,000 in the year to 30 September
2007 has been reversed.
A full impairment review of the carrying value of goodwill is
required at the date of transition (1 October 2006) and any
impairment losses treated as a reduction in retained earnings.
Goodwill impairment losses may not be reversed.
1.4.3 IFRS 2: Share based payments
A deductible temporary difference may arise on the difference
between the tax base of the employee services received to date
(being the amount accrued to date that the tax authorities will
permit as a deduction in future periods) and the carrying amount
of nil on the balance sheet, resulting in a deferred tax asset.
As the future deduction depends on the share price at the date of
exercise in the future, the tax base of the employee services
received must be estimated based on the information available at
the end of the period and is therefore remeasured at the end of
each period, with a resulting adjustment to the deferred tax
asset. This has resulted in the recognition of an additional
deferred tax asset of �169k in the year to 30 September 2007. As
a deferred tax asset equal to the tax rate applied to the
cumulative share-based payment charge recorded in the income
statement had already been recognised in the group's UK GAAP
financial statements, the entire increase in the deferred tax
asset required under IFRS has been credited to the equity
reserve.
1.4.4 IAS 39: Derivative financial instruments
The Group uses derivative financial instruments (derivatives) to
manage interest rate risk. Under UK GAAP, these derivatives are
not recognised as assets and liabilities on the Balance sheet and
gains and losses are not reported in the Profit and loss account
until realised.
Under IFRS, derivatives are initially recognised on the balance
sheet at fair value and subsequently remeasured at each balance
sheet date at fair value. Changes in the fair value of the
derivatives are recognised in the Income statement unless they
are designated and qualify for hedge accounting. Under hedge
accounting, to the extent that the hedge is effective, the gains
and losses arising on the fair valuation of the hedging
instrument is deferred in equity with the underlying hedged asset
or liability recognised on the balance sheet.
Hedge accounting will be applied to the interest rate swaps taken
out to manage the Group's exposure to interest rates.
SECTION 2
FINANCIAL INFORMATION FOR THE YEAR ENDED 30 SEPTEMBER 2007
2.1 Group Income Statement in accordance with IFRS for the year ended 30
September 2007
2.2 Group Balance Sheet in accordance with IFRS at:
- 1 October 2006
- 30 September 2007
2.3 Group statement of changes in Shareholders' Equity at 30 September
2007
2.4 Group Cash Flow statement at 30 September 2007
2.1 Group income statement - in accordance with IFRS (unaudited)
For the year ended 30 September 2007
Continuing
operations
2007
Total
�'000
Revenue 38,498
Cost of sales (24,808)
__________
Gross profit 13,690
Administrative expenses (11,489)
__________
Operating profit 2,201
Interest receivable 72
Finance costs (846)
__________
Profit before tax 1,427
Analysed as:
__________________________________________________________________________________________________________________
Profit before tax and amortisation 3,557
Amortisation (2,130)
__________________________________________________________________________________________________________________
Income tax expense (670)
__________
Profit for the period attributable to equity shareholders of
the Parent 757
==========
Earnings per share
Basic 2.07
Diluted 1.95
==========
For the reconciliation from the UK GAAP profit and loss account to the IFRS
income statement please refer to Section 4.
2.2 Group balance sheet
As at 1 October 2006 and 30 September 2007
Opening IFRS
balance sheet
30 September 2007 2006
�'000 �'000
ASSETS
Non-current assets
Goodwill 37,127 17,525
Intangible assets 4,494 2,860
Property, plant and equipment 2,480 1,014
_________ _________
44,101 21,399
_________ _________
Current assets
Inventory and work in progress 1,278 1,445
Trade and other receivables 17,135 7,336
Other financial assets 86 -
Cash and cash equivalents 1,418 3,300
_________ _________
19,917 12,081
_________ _________
TOTAL ASSETS 64,018 33,480
_________ _________
LIABILITIES
Current liabilities
Bank overdrafts and borrowings (2,150) (886)
Obligations under finance lease (483) (140)
Trade and other payables (10,229) (3,834)
Deferred consideration (3,000) -
Current tax liabilities (1,932) (232)
_________ _________
(17,794) (5,092)
_________ _________
Net current assets 2,123 6,989
_________ _________
Non-current liabilities
Bank overdrafts and borrowings (6,850) -
Obligations under finance lease (529) (336)
Trade and other payables (1,001) (1,001)
Deferred consideration (2,649) (5,206)
Deferred tax liabilities (1,110) (914)
_________ _________
(12,139) (7,457)
_________ _________
TOTAL LIABILITIES (29,933) (12,549)
_________ _________
Net assets 34,085 20,931
========= =========
EQUITY
Share capital 4,068 3,220
Share premium 13,649 13,649
Other reserves 15,233 4,081
Equity reserve 368 33
Hedging reserve 62 -
Retained earnings/(accumulated loss) 705 (52)
_________ _________
Total equity 34,085 20,931
========= =========
For the reconciliation from the UK GAAP to the IFRS balance sheets please refer
to Section 4.
2.3 Group cash flow statement
30 September 2007
IFRS
�'000
Cash flows from operating activities
Cash generated from operations 3,043
Income taxes paid (734)
_________
Net cash generated from operating activities 2,309
_________
Cash flows from investing activities
Purchases of property, plant and equipment (438)
Disposal of property, plant and equipment 98
Acquisitions (11,277)
_________
Net cash generated from investing activities (11,617)
Net cash used in financing activities
Proceeds from new loans 9,000
Finance lease principal repayments (357)
Interest received 72
Bank interest paid (324)
Interest paid on finance leases (79)
_________
Net cash generated from financing activities 8,312
_________
Net decrease in cash and cash equivalents (996)
Cash and cash equivalents at beginning of period 2,414
_________
Cash and cash equivalents at end of period 1,418
=========
�'000
(a) Cash generated from operations comprises:
Profit from continuing operations 2,201
Amortisation 2,130
Depreciation 556
Profit on disposal of property, plant and equipment (7)
Movements relating to share-based payments 171
Working capital decrease (2,008)
_________
3,043
=========
At At
1 October 30 September
2006 2007
(b) Cash and cash equivalents comprise: �'000 �'000
Cash and cash equivalents 3,300 1,418
Bank overdrafts (886) -
________ ________
2,414 1,418
======== ========
2.4 Group statement of changes in shareholders' equity
For the year ended 30 September 2007
Share Share Equity Other Hedging Retained
capital premium reserve reserves reserve earnings Total
�'000 �'000 �'000 �'000 �'000 �'000 �'000
Balance at 1 October
2006 3,220 13,649 33 4,081 - (52) 20,931
Shares issued in the
current year 848 - - 11,152 - - 12,000
Share based payments - - 335 - - - 335
Hedge accounting - - - - 62 - 62
Profit for the year - - - - - 757 757
_______ _______ _______ _______ _______ _______ _______
Balance at 30
September 2007 4,068 13,649 368 15,233 62 705 34,085
======= ======= ======= ======= ======= ======= =======
SECTION 3
PRIMARY ACCOUNTING POLICIES
3.1 Accounting policies
Basis of preparation
For the year ended 30 September 2008 the Company will be required to
prepare consolidated financial statements under International
Accounting Standards. These will be those International Accounting
Standards (IAS), International Financial Reporting Standards (IFRS)
and related Interpretations (SIC/ IFRIC interpretations), subsequent
amendments to those standards and related interpretations, future
standards and related interpretations issued or adopted by the
International Accounting Standards Board (IASB) that have been
endorsed by the EC for use in the European Union.
At the date of this announcement, the Commission has endorsed all
standards issued by the IASB. However, the endorsement process is
still ongoing in respect of certain Interpretations and Amendments.
The preliminary opening IFRS balance sheet, preliminary IFRS
comparatives for 2007 ("consolidated financial information") and the
reconciliation between UK GAAP and IFRS have been prepared by
management using its best knowledge of the expected standards and
interpretations of the IASB, facts and circumstances, and accounting
policies that will be applied when the company prepares its first
complete set of IFRS financial statements as at 30 September 2008.
Therefore, until such time, the possibility cannot be excluded that
the accompanying preliminary opening balance sheet, preliminary IFRS
comparatives for 2007 and the reconciliation between UK GAAP and IFRS
may require adjustment before constituting the final positions.
Moreover, under IFRS, only a complete set of financial statements
comprising a balance sheet, income statement, statement of changes in
equity, cash flow statement, together with comparative financial
information and explanatory notes, can provide a fair presentation of
the company's financial position, results of operations and cash flow.
Basis of accounting
The consolidated financial information has been prepared in accordance
with International Financial Reporting Standards (IFRSs). The
consolidated financial information has also been prepared in
accordance with IFRSs adopted by the European Union and therefore the
group financial statements comply with Article 4 of the EU IAS
Regulation.
The consolidated financial information has been prepared on the
historical cost basis except for the revaluation of certain financial
instruments. The principal accounting policies adopted are set out
below.
IFRS 1 permits companies adopting IFRS for the first time to take
certain exemptions from full retrospective application of IFRS
accounting policies. Described below are the applicable instances
where the Group has not opted for these exemptions:
(a) Business combinations: The Group has chosen to restate business
combinations that occurred prior to 1 October 2006 to comply with
IFRS 3 'Business Combinations'. As a result that carrying value
of goodwill recorded under UK GAAP as at 1 October 2006 has been
amended at transition date.
(b) Financial instruments: The Group has applied IAS 32 and IAS 39
from 1 October 2006.
The consolidated financial information incorporates the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 30 September each year. Control is
achieved where the Company has the power to govern the financial
and operating policies of an investee entity so as to obtain
benefits from its activities.
The results of subsidiaries acquired or disposed off during the
year are included in the consolidated income statement from the
effective date of acquisition or up to the effective date of
disposal, as appropriate.
Where necessary, adjustments are made to the financial statements
of subsidiaries to bring the accounting policies used in line
with those used by the group.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
Business combinations
The acquisition of subsidiaries is accounted for using the
purchase method. The cost of the acquisition is measured at the
aggregate of the fair values, at the date of exchange, of assets
given, liabilities incurred or assumed, and equity instruments
issued by the Group in exchange for control of the acquiree, plus
any costs directly attributable to the business combination. The
acquiree's identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS 3
are recognised at their fair value at the acquisition date.
Goodwill arising on acquisition is recognised as an asset and
initially measured at cost, being the excess of the cost of the
business combination over the Group's interest in the net fair
value of the identifiable assets, liabilities and contingent
liabilities recognised. If, after reassessment, the Group's
interest in the net fair value of the acquiree's identifiable
assets, liabilities and contingent liabilities exceeds the cost
of the business combination, the excess is recognised immediately
in profit or loss.
Goodwill
Goodwill arising on consolidation represents the excess of the
cost of acquisition over the group's interest in the fair value
of the identifiable assets and liabilities of a subsidiary at the
date of acquisition. Goodwill is initially recognised as an asset
at cost and is subsequently measured at cost less any accumulated
impairment losses. Goodwill which is recognised as an asset is
reviewed for impairment at least annually. Any impairment is
recognised immediately in profit or loss and is not subsequently
reversed.
For the purpose of impairment testing, goodwill is allocated to
each of the Group's cash-generating units expected to benefit
from the synergies of the combination. Cash-generating units to
which goodwill has been allocated are tested for impairment
annually, or more frequently when there is an indication that the
unit may be impaired. If the recoverable amount of the
cash-generating unit is less than the carrying amount of the
unit, the impairment loss is allocated first to reduce the
carrying amount of any goodwill allocated to the unit and then to
the other assets of the unit pro-rata on the basis of the
carrying amount of each asset in the unit. An impairment loss
recognised for goodwill is not reversed in a subsequent period.
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for
services provided in the normal course of business, net of
discounts, VAT and other sales-related taxes.
Profit is recognised on long-term contracts if the final outcome
can be assessed with reasonable certainty by including in the
income statement revenue and related costs as contract activity
progresses. Revenue is calculated by reference to the value of
work performed to date as a proportion of total contract value.
Leasing
Leases are classified as finance leases whenever the terms of the
lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as
operating leases.
Assets held under finance leases are recognised as assets of the
group at their fair value or, if lower, at the present value of
the minimum lease payments, each determined at the inception of
the lease.
The corresponding liability to the lessor is included in the
balance sheet as a finance lease obligation. Lease payments are
apportioned between finance charges and reduction of the lease
obligation so as to achieve a constant rate of interest on the
remaining balance of the liability. Finance charges are charged
directly against income.
Rentals payable under operating leases are charged to income on a
straight-line basis over the term of the relevant lease.
Benefits received and receivable as an incentive to enter into an
operating lease are also spread on a straight-line basis over the
lease term.
Borrowing costs
Borrowing costs are recognised in profit or loss in the period in
which they are incurred.
Retirement benefit costs
Payments to defined contribution retirement benefit schemes are
charged as an expense as they fall due.
Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
income statement because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The group's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax
bases used in the computation of taxable profit, and is accounted
for using the balance sheet liability method. Deferred tax
liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available
against which deductible temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary
difference arises from the initial recognition of goodwill or
from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction
that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries, except where
the group is able to control the reversal of the temporary
difference and it is probable that the temporary difference will
not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to
allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the income
statement, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt
with in equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes
levied by the same taxation authority and the Group intends to
settle its current tax assets and liabilities on a net basis.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated
depreciation and any recognised impairment loss.
Depreciation is charged so as to write off the cost or valuation
of assets, other than land and assets under construction, over
their estimated useful lives, on the following bases:
Leasehold property 10% on cost
Plant and machinery 10% on cost
Office equipment 16.6%-25% on cost
Motor vehicles 25% on reducing balance
Assets held under finance leases are depreciated over their
expected useful lives on the same basis as owned assets or, where
shorter, over the term of the relevant lease.
The gain or loss arising on the disposal or retirement of an
asset is determined as the difference between the sales proceeds
and the carrying amount of the asset and is recognised in income.
Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the group reviews the carrying
amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered
an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to
determine the extent of the impairment loss (if any). Where the
asset does not generate cash flows that are independent from
other assets, the group estimates the recoverable amount of the
cash-generating unit to which the asset belongs. An intangible
asset with an indefinite useful life is tested for impairment
annually and whenever there is an indication that the asset may
be impaired.
Recoverable amount is the higher of fair value less costs to sell
and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset for which
the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised as an
expense immediately, unless the relevant asset is carried at a
revalued amount, in which case the impairment loss is treated as
a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount
that would have been determined had no impairment loss been
recognised for the asset (cash-generating unit) in prior years. A
reversal of an impairment loss is recognised as income
immediately, unless the relevant asset is carried at a revalued
amount, in which case the reversal of the impairment loss is
treated as a revaluation increase.
Inventories and work in progress
Inventories are stated at the lower of cost and net realisable
value. Cost comprises direct materials and, where applicable,
direct labour costs and those overheads that have been incurred
in bringing the inventories to their present location and
condition. Cost is calculated using the weighted average method.
Net realisable value represents the estimated selling price less
all estimated costs of completion and costs to be incurred in
marketing, selling and distribution.
Work in progress on service contracts is stated at cost plus,
where the outcome can be assessed with reasonable certainty,
estimated profits attributable to the stage of completion less
provision for any expected losses and progress payments received
on account. Amounts recoverable on long term service contracts,
which are included in trade and other receivables, are stated at
the net sales value of the work done less progress payments
received on account. Excess progress payments are included on
trade and other payables. Cumulative costs incurred, less amounts
transferred to cost of sales, less provision for contingencies
and expected future losses on service contracts, are included as
long-term service contract balances in inventories.
Financial instruments
Financial assets and financial liabilities are recognised in the
group's balance sheet when the group becomes a party to the
contractual provisions of the instrument.
Trade receivables
Trade receivables are measured at initial recognition at fair
value. Appropriate allowances for estimated irrecoverable amounts
are recognised in profit or loss when there is objective evidence
that the asset is impaired.
Investments
Investments in subsidiaries are stated at cost, less provision
for any impairment.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand
deposits and other short-term highly liquid investments that are
readily convertible to a known amount of cash and are subject to
an insignificant risk of changes in value.
Financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements
entered into. An equity instrument is any contract that evidences
a residual interest in the assets of the group after deducting
all of its liabilities.
Bank borrowings
Interest-bearing bank loans and overdrafts are recorded at the
proceeds received, net of direct issue costs. Finance charges,
including premiums payable on settlement or redemption and direct
issue costs, are accounted for on an accrual basis in profit or
loss using the effective interest rate method and are added to
the carrying amount of the instrument to the extent that they are
not settled in the period in which they arise.
Trade payables
Trade payables are initially measured at fair value.
Equity instruments
Equity instruments issued by the Company are recorded at the
proceeds received, net of direct issue costs.
Derivative financial instruments and hedge accounting
The group's activities expose it primarily to the financial risk
of changes in interest rates. The group uses interest rate swap
contracts to hedge this exposure. The group does not use
derivative financial instruments for speculative purposes.
The use of financial derivatives is governed by the group's
policies approved by the board of directors, which provide
written principles on the use of financial derivatives.
Changes in the fair value of derivative financial instruments
that are designated and effective as hedges of future cash flows
are recognised directly in equity and the ineffective portion is
recognised immediately in the income statement. If the cash flow
hedge of a firm commitment or forecasted transaction results in
the recognition of an asset or a liability, then, at the time the
asset or liability is recognised, the associated gains or losses
on the derivative that had previously been recognised in equity
are included in the initial measurement of the asset or
liability. For hedges that do not result in the recognition of an
asset or a liability, amounts deferred in equity are recognised
in the income statement in the same period in which the hedged
item affects net profit or loss.
Changes in the fair value of derivative financial instruments
that do not qualify for hedge accounting are recognised in the
income statement as they arise.
Hedge accounting is discontinued when the hedging instrument
expires or is sold, terminated, or exercised, or no longer
qualifies for hedge accounting. At that time, any cumulative gain
or loss on the hedging instrument recognised in equity is
retained in equity until the forecasted transaction occurs. If a
hedged transaction is no longer expected to occur, the net
cumulative gain or loss recognised in equity is transferred to
net profit or loss for the period.
Provisions
Provisions are recognised when the Group has a present obligation
as a result of a past event, and it is probable that the Group
will be required to settle that obligation. Provisions are
measured at the directors' best estimate of the expenditure
required to settle the obligation at the balance sheet date, and
are discounted to present value where the effect is material.
Share-based payments
The group issues equity-settled share-based payments to certain
employees. Equity-settled share-based payments are measured at
fair value (excluding the effect of non market-based vesting
conditions) at the date of grant. The fair value determined at
the grant date of the equity-settled share-based payments is
expensed on a straight-line basis over the vesting period, based
on the group's estimate of shares that will eventually vest and
adjusted for the effect of non market-based vesting conditions.
Fair value is measured by use of the Black-Scholes model. The
expected life used in the model has been adjusted, based on
management's best estimate, for the effects of
non-transferability, exercise restrictions, and behavioural
considerations.
Intangible assets
Customer relationships
Customer relationships are measured as the present value of cash
flows attributable to the relationship after deduction of
appropriate contributory assets charged. The relationship is
amortised over its expected useful life, typically 3 years.
Order book
Order book is the value of confirmed orders on the date of
acquisition after appropriate costs have been deducted. The order
book is amortised over the period in which it is expected to
unwind.
SECTION 4
At 1 October 2006
4.1 Restatement of Opening IFRS balance sheet - effect of IAS 1
Presentation of Financial Statements 4.2 Restatement of Opening IFRS
balance sheet - reconciliation of UK GAAP to IFRS
At 30 September 2007
4.3 Restatement of Balance sheet - effect of IAS 1 Presentation of
Financial Statements
4.4 Restatement of Balance sheet - reconciliation of UK GAAP to IFRS
4.5 Restatement of Income statement - reconciliation of UK GAAP to IFRS
4.6 Reconciliation of Statement of changes in equity
4.1 Restatement of opening IFRS balance sheet as at 1 October 2006 - effect of
IAS1 'Presentation of Financial Statements'
UK GAAP
balances UK GAAP
in UK balances
GAAP in IFRS
format format
�'000 �'000 �'000
Fixed assets Non-current assets
Intangible assets 19,539 - 19,539 Goodwill
Tangible assets 1,014 - 1,014 Property, plant and equipment
Current assets Current assets
Stocks and work in progress 1,445 - 1,445 Inventory and work in progress
Debtors 7,336 - 7,336 Trade and other receivables
Cash at bank and in hand 3,300 - 3,300 Cash and cash equivalents
Creditors: amounts falling due within one year Current liabilities
Bank overdraft (886) - (886) Bank overdraft and borrowings
Hire purchase and finance lease (140) - (140) Obligations under finance lease
Corporation tax (232) - ( 232) Current tax liabilities
Other creditors (3,834) - (3,834) Trade and other payables
Creditors: amounts falling due after more
than one year Non-current liabilities
Hire purchase and finance lease (336) - (336) Obligations under finance lease
(61) (61) Deferred tax liabilities
(5,206) (5,206) Deferred consideration
(1,001) (1,001) Trade and other payables
Provisions for liabilities and charges
Deferred taxation (61) 61 -
Deferred consideration (5,206) 5,206 -
Other (1,001) 1,001 -
_______ _______ _______
Net assets 20,938 - 20,938 Net assets
======= ======= =======
Capital and reserves Equity
Called up share capital 3,220 - 3,220 Share capital
Share premium account 13,649 - 13,649 Share premium account
Equity reserve 28 - 28 Equity reserve
Other reserves 4,081 - 4,081 Other reserves
Profit and loss account (40) - (40) Accumulated loss
_______ _______ _______
Equity shareholders' funds 20,938 - 20,938 Total equity
======= ======= =======
4.2 Restatement of opening IFRS balance sheet as at 1 October 2006 -
reconciliation of UK GAAP to IFRS
UK GAAP IFRS2
balances Share- IAS38 IFRS3
in IFRS based Intangible Business IFRS
format payments assets combinations Balances
�'000 �'000 �'000 �'000 �'000
Non-current assets
Goodwill 19,539 - (2,205) 191 17,525
Intangible assets - - 2,860 - 2,860
Property, plant and equipment 1,014 - - - 1,014
Current assets
Inventory and work in progress 1,445 - - - 1,445
Trade and other receivables 7,336 - - - 7,336
Cash and cash equivalents 3,300 - - - 3,300
_______ _______ _______ _______ _______
Total assets 32,634 - 655 191 33,480
_______ _______ _______ _______ _______
Current liabilities
Bank overdrafts and borrowings (886) - - - (886)
Obligations under finance lease (140) - - - (140)
Trade and other payables (3,834) - - - (3,834)
Current tax liabilities (232) - - - (232)
Non-current liabilities
Obligations under finance lease (336) - - - (336)
Trade and other payables (1,001) - - - (1,001)
Deferred taxation (61) 5 (858) - (914)
Deferred consideration (5,206) - - - (5,206)
_______ _______ _______ _______ _______
Total liabilities (11,696) 5 (858) - (12,549)
_______ _______ _______ _______ _______
Net assets 20,938 5 (203) 191 20,931
======= ======= ======= ======= =======
Equity
Share capital 3,220 - - - 3,220
Share premium account 13,649 - - - 13,649
Other reserve 4,081 - - - 4,081
Equity reserve 28 5 - - 33
(Accumulated loss)/retained earnings (40) - (203) 191 (52)
_______ _______ _______ _______ _______
Total equity 20,938 5 (203) 191 20,931
======= ======= ======= ======= =======
4.3 Restatement of balance sheet as at 30 September 2007 - effect of IAS1
'Presentation of Financial Statements'
UK GAAP
balances UK GAAP
in UK balances
GAAP in IFRS
format format
�'000 �'000 �'000
Fixed assets Non-current assets
Intangible assets 40,523 - 40,523 Goodwill
Tangible assets 2,480 - 2,480 Property, plant and equipment
Current assets Current assets
Stocks and work in progress 1,278 - 1,278 Inventory and work in progress
Debtors 17,135 - 17,135 Trade and other receivables
Cash at bank and in hand 1,418 - 1,418 Cash and cash equivalents
Creditors: amounts falling due within one year Current liabilities
Bank loans (2,150) - (2,150) Bank overdraft and borrowings
Hire purchase and finance lease (483) - (483) Obligations under finance lease
Corporation tax (1,932) - (1,932) Current tax liabilities
Deferred consideration (3,000) - (3,000) Deferred consideration
Other creditors (10,229) - (10,229) Trade and other payables
Creditors: amounts falling due after
more than one year Non-current liabilities
Bank loans (6,850) - (6,850) Bank overdraft and borrowings
Hire purchase and finance lease (529) - (529) Obligations under finance lease
(30) (30) Deferred tax liabilities
(2,649) (2,649) Deferred consideration
(1,001) (1,001) Trade and other payables
Provisions for liabilities and charges
Deferred taxation (30) 30 -
Deferred consideration (2,649) 2,649 -
Other (1,001) 1,001 -
_______ _______ _______
Net assets 33,981 - 33,981 Net assets
======= ======= =======
Capital and reserves Equity
Called up share capital 4,068 - 4,068 Share capital
Share premium account 13,649 - 13,649 Share premium account
Equity reserve 199 - 199 Equity reserve
Other reserves 15,233 - 15,233 Other reserves
Profit and loss account 832 - 832 Retained earnings
_______ _______ _______
Equity shareholders' funds 33,981 - 33,981 Total equity
======= ======= =======
4.4 Restatement of balance sheet as at 30 September 2007 - reconciliation
of UK GAAP to IFRS
UK GAAP IFRS2
balances Share- IAS38 IFRS3
in IFRS based IAS39 Intangible Business IFRS
format payments Derivatives assets combinations Balances
�'000 �'000 �'000 �'000 �'000 �'000
Non-current assets
Goodwill 40,523 - - (4,978) 1,582 37,127
Intangible assets - - - 4,494 - 4,494
Property, plant and equipment 2,480 - - - - 2,480
Current assets
Inventory and work in progress 1,278 - - - - 1,278
Trade and other receivables 17,135 - - - - 17,135
Other financial assets - - 86 - - 86
Cash and cash equivalents 1,418 - - - - 1,418
_______ _______ _______ _______ _______ _______
Total assets 62,834 - 86 (484) 1,582 64,018
_______ _______ _______ _______ _______ _______
Current liabilities
Bank overdrafts and borrowings (2,150) - - - - (2,150)
Obligations under finance lease (483) - - - - (483)
Trade and other payables (10,229) - - - - (10,229)
Current tax liabilities (1,932) - - - - (1,932)
Deferred consideration (3,000) - - - - (3,000)
Non-current liabilities
Bank overdrafts and borrowings (6,850) - - - - (6,850)
Obligations under finance lease (529) - - - - (529)
Trade and other payables (1,001) - - - - (1,001)
Deferred tax liabilities (30) 169 (24) (1,225) - (1,110)
Deferred consideration (2,649) - - - - (2,649)
_______ _______ _______ _______ _______ _______
Total liabilities (28,853) 169 (24) (1,225) - (29,933)
_______ _______ _______ _______ _______ _______
Net assets 33,981 169 62 (1,709) 1,582 34,085
======= ======= ======= ======= ======= =======
Equity
Share capital 4,068 - - - - 4,068
Share premium account 13,649 - - - - 13,649
Equity reserve 199 169 - - - 368
Other reserves 15,233 - - - - 15,233
Hedging reserve - - 62 - - 62
Retained earnings 832 - - (1,709) 1,582 705
_______ _______ _______ _______ _______ _______
Total equity 33,981 169 62 (1,709) 1,582 34,085
======= ======= ======= ======= ======= =======
4.5 Restatement of income statement for the year ended 30 September 2007 -
reconciliation of UK GAAP to IFRS
UK GAAP
balances IAS38 IFRS3
in IFRS Intangible Business IFRS
format assets combinations Balances
�'000 �'000 �'000 �'000
Continuing operations:
Revenue 38,498 - - 38,498
Cost of sales (24,808) - - (24,808)
_______ _______ _______ _______
Gross profit 13,690 - - 13,690
Administrative expenses (10,750) (2,130) 1,391 (11,489)
_______ _______ _______ _______
Operating profit 2,940 (2,130) 1,391 2,201
Interest receivable 72 - - 72
Finance costs (846) - - (846)
_______ _______ _______ _______
Profit before tax 2,166 (2,130) 1,391 1,427
Income tax expense (1,294) 624 - (670)
_______ _______ _______ _______
Profit for the period from continuing operations 872 (1,506) 1,391 757
_______ _______ _______ _______
Profit for the period attributable to equity
shareholders of the Parent 872 (1,506) 1,391 757
======= ======= ======= =======
4.6 Reconciliation of changes in equity for the year ended 30 September 2007
Share Share Other Equity Hedging Retained
capital premium reserves reserve reserve earnings Total
�'000 �'000 �'000 �'000 �'000 �'000 �'000
Balance at 30 September 1 October 2006
- UK GAAP 3,220 13,649 4,081 28 - (40) 20,938
IFRS adjustments
- IFRS2 - Share based payments - - - 5 - - 5
- IFRS3 - Business combinations - - - - - 191 191
- IAS38 - Intangible assets - - - - - (203) (203)
_______ _______ _______ _______ _______ _______ _______
Balance at 1 October 2006 - IFRS 3,220 13,649 4,081 33 - (52) 20,931
======= ======= ======= ======= ======= ======= =======
Profit for the year - - - - - 757 757
Shares issued in the current year 848 - 11,152 - - - 12,000
Share based payments (net of tax) - - - 335 - - 335
Movement in hedging reserve - - - - 62 - 62
_______ _______ _______ _______ _______ _______ _______
Total equity at 30 September 2007 4,068 13,649 15,233 368 62 705 34,085
======= ======= ======= ======= ======= ======= =======
Enquiries:
Silverdell Plc
Chris Sims, Finance Director 020 7004 2744
Collins Stewart
Chris Howard / Oliver Quarmby 020 7523 8350
FD
Jonathon Brill, Billy Clegg, Alex Beagley 020 7831 3113
Notes to Editors:
Silverdell is a leading nationwide supplier of asbestos removal and consultancy
services to both the private and public sectors. The Company was listed on AIM
as Bow Lane Capital Plc in April 2006. In July 2006 it acquired Silverdell (UK)
Limited for up to �22.2m, following which it changed its name to Silverdell Plc.
The Company acquired Redhill Analysts Limited, a provider of asbestos
consultancy, survey, air monitoring and contract management services, in
December 2006 for up to �10m. In July 2007, Silverdell acquired Kitsons Group
Limited, which provides asbestos removal, insulation and scaffolding services
for �14m.
The Silverdell group employs nearly 600 staff operating from 15 offices across
the UK. Silverdell (UK) Limited won Specialist Contractor of the Year (Asbestos
Removal) at Construction News Awards in both 2006 and 2007.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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